If you have visited the Velocity Conference website you know the theme for this year is Icon, Geniuses and Mavericks. The Private Brand Revolution Grows! This year’s event will be held April 29 – May 1, 2019, at the Le Méridien Charlotte in Charlotte, NC.
Today I am excited to present one of the Geniuses in that help bring that theme to life, Jan-Benedict Steenkamp. Private brand readers may remember Steenkamp’s 2007 seminal book “Private Label Strategy: How to Beat the Store Brand Challenge.”
Professor Jan-Benedict(JB) Steenkamp of UNC Kenan-Flagler Business School will present a look inside his new book“Retail Disruptors: The Spectacular Rise and Impact of the Hard Discounters” where he explores the biggest disruption in grocery retailing in 50 years. He analyzes hard discounters from an international perspective to raise awareness of who is under threat and what can be done about it.
Velocity Conference attendees will each receive a copy of JB’s book.
The U.S. grocery market is the biggest in the world and it’s under competitive threat from “hard discounters” like Aldi, Trader Joe’s, and now Lidl.
Hard discounters are the source of the biggest disruption in grocery retailing in half a century. Whenever they enter a market, grocery retail is profoundly and irrevocably changed, and their sites are set on the U.S.
Steenkamp’s new book is the first to explore this upheaval: “Retail Disruptors: The Spectacular Rise and Impact of the Hard Discounters” by Jan-Benedict Steenkamp, Knox Massey Distinguished Professor of Marketing at the University of North Carolina Kenan-Flagler Business School, and Laurens Sloot, Distinguished Professor of Retail Marketing at the University of Groningen in the Netherlands. They are leading authorities in branding, retail strategy, private brand, and hard discounting.
“Hard discounters are the only players that brought mighty Walmart to its knees, not in one major market but in two: Germany and Great Britain,” said Steenkamp. “Is America next? Aldi is expanding its U.S. network by 60% to 2,500 stores in 2022, second only to Walmart and Kroger. And everywhere Lidl enters a market, prices drop steeply.”
Hard-discount retailers offer basic goods and daily necessities at the lowest possible prices – usually 50-60% lower than national brands – while maintaining high-quality standards. “Through a sophisticated sourcing and assortment strategy, they have achieved operational efficiencies that even Walmart cannot dream of,” says Steenkamp.
According to Steenkamp, “The market share of Private Brands in America reached an all-time in 2018 of 22%. A key catalyst that is driving US private brands is share gains from hard discounters (Aldi, Trader Joe’s, Lidl) and conventional retailers’ reaction to their growth by upgrading and expanding their own private brands assortment. It will not be long before one out of every four dollars spent on grocery products (foods, beverages, personal care, household care) will be spent on private brands.”
“Underestimating this new threat has led to dramatic decreases in the market share of conventional retailers and brand manufacturers in market after market – first in Germany, followed by France, the Netherlands, Belgium, Poland, the U.K., Italy and Australia,” the authors write. “As part of their aggressive strategy of international expansion, hard discounters have set their sights on the ultimate prize: the U.S.”
Hard discounters are having phenomenal success in many countries, says Steenkamp. “And when it comes to innovation, hard discounting is the biggest in brick-and-mortar retailing in the past 25 years.”
“Retail Disruptors” analyzes the discounters from an international perspective to raise awareness of who is under threat and what they can do about it, says Steenkamp. “We offer a message of hope, but competing is going to be challenging.”
Using data and providing actionable strategies, the authors address:
- The secrets of hard discounters’ success
- The business model for profitability at low price points
- Specific strategies used by Aldi, Lidl and Trader Joe’s
- The impact on key markets in Germany,the U.K., Australia, Poland, Turkey, and the U.S.
- How retailers can respond
- Producing private brands for hard discounters
As they redefine value for money, hard discounters will remain a permanent fixture in grocery retail, says Steenkamp.
“The ultimate winner is the consumer,” he says. “Once hard discounters become a meaningful market presence, conventional retailers respond by dropping their prices – so even consumers who don’t shop at hard discounters benefit from their market success.” In 2018 alone, U.S. consumers save $20-30 billion dollars on their grocery purchases because of the success of hard discounters.